Openspace Ventures Accelerates Into The Curve

The Southeast Asian venture capital fund’s deep pool of expertise drawn from its diverse team drives fund outperformance and growing assets under management.

Southeast Asia’s technology sector powers ahead despite an unprecedented crisis that has affected businesses and ravaged economies globally. The value of fundraising deals in the region rose 90% to US$2.7 billion in the second quarter from a year earlier, according to financial news site DealStreetAsia. Transaction counts increased by 60% to 184 over the same period.

Technology platforms welcomed healthy revenue boosts from the pandemic-fueled reshaping of homes and workplaces. Sectors such as health, education and online media, in particular, had strong showings as consumers and businesses spent big on digital offerings in the face of Covid-19.

Investors are paying attention. EMPEA’s 2020 Global Limited Partners Survey, featuring the views of 109 limited partners on the attractiveness of current conditions and outlook for private capital in emerging markets, saw Southeast Asia maintain its pole position. 

Poised for Regional Growth

Singapore-based Openspace Ventures, an early investor in Indonesian decacorn Gojek, is a pioneer in the region. Established in 2014, the fund now manages over US$350 million in committed capital, and boasts 32 investments and counting. To date, the firm’s portfolio companies have attracted US$6.5 billion in follow-on capital. Even in the midst of Covid-19, Openspace’s companies raised more than US$2 billion in capital in the 12 months to September, outpacing its peer average by over seven times. The firm counts institutional powerhouses, including sovereign wealth funds, superannuations and university endowments, in its stable of limited partners.


Openspace’s strategy is clearly paying dividends. The VC’s first and second funds, launched in 2014 and 2017, respectively, are both performing in the top quartile against global peers, according to Cambridge Associates and Preqin benchmarks, with Fund I in the top 5%.


International players are expanding into the region to capitalize on Southeast Asia’s potential. Lightspeed, an established global venture capital (VC) firm, set up shop in Singapore this year, joining other well-known VCs like Sequoia Capital India, 500 Startups and Wavemaker in providing great liquidity to the market. But while ASEAN is gradually coalescing into an integrated market, it is not homogenous. Firms and investors must have boots on the ground to leverage strategic local networks for success.

Openspace is built for purpose. Its team of 22 includes 12 nationalities, and it has offices in Bangkok and Jakarta. The firm made four investments in Indonesia and Thailand in the midst of the pandemic, claiming a return on its dominant geographical advantage. While currently providing coverage out of Singapore, it plans to open offices in Vietnam and the Philippines in 2021, deepening its long-term commitment to Southeast Asia. 

Capturing Alpha

Investor interest is expanding beyond fintech and surging into newer areas such as healthtech, edtech, agtech and cleantech. Openspace already has substantial expertise here, having entered these sectors and geographies ahead of the curve.

The firm attributes its early successes in Indonesia, including investments in Gojek, TaniHub, FinAccel and Halodoc, to a strategy of active anticipation. “Our ability to source and analyze data and have conversations with industry shapers on macroeconomic and geopolitical trends gives us an edge in picking startups that succeed at scale,” says Shane Chesson, Founding Partner at Openspace. The firm consistently evaluates a high number of startups—it assessed over 800 in 2019 alone.

Founding Partners Shane Chesson (left) and Hian Goh met at INSEAD.
Openspace’s team members at their Singapore office.

While Indonesia is home to many of Southeast Asia’s tech stars, others in the region are also producing winners. The Philippine and Thai markets have large youthful populations, an emerging middle class, and rising internet penetration. Kumu, the Philippines’ fastest-growing consumer app, saw average monthly active users increase by over 500 times since 2018 to exceed 1 million users earlier this year.

Deep Operations Expertise

Openspace propels value creation. The team features full-time, in-house operations experts in the key areas of technology, legal, human resources, and environmental, social and corporate governance. One notable example is Yiliang Zhao, who holds a Ph.D. in computer science (artificial intelligence). As the firm’s Vice President of Data Science he works with portfolio companies to develop machine learning models and optimization algorithms to generate revenue and streamline operations. Zhao worked with Finnomena, a Thai digital wealth management platform, to build predictive models identifying investment patterns as well as product recommendation models. Finnomena’s account openings tripled to over 42,000 in the third quarter from a year ago.

“Our diverse expert team gives us a clear competitive advantage and we can therefore take a high-conviction and constructive approach to investments. This drives out performance in our portfolio companies,” says Hian Goh, Founding Partner at Openspace.

Openspace’s strategy is clearly paying dividends. The VC’s first and second funds, launched in 2014 and 2017, respectively, are both performing in the top quartile against global peers, according to Cambridge Associates and Preqin benchmarks, with Fund I in the top 5%.

Openspace’s Expansion

Southeast Asia already has more than 10 unicorns and others are likely to follow suit as funds flow into the region. With its successful series A track record, local networks and extensive operational capabilities, Openspace is in peak position to capture upside.

Chesson sees enormous untapped potential and believes the region is poised for transformative growth. On the recent launch of OSV+, Openspace’s opportunity fund, Chesson says, “The regional startup ecosystem is developing at pace. A growth-stage fund like OSV+ puts us in a superior position to accelerate the trajectory of mid-stage technology companies strategically expanding across Southeast Asia.”

Halodoc’s Covid-19 rapid testing initiative with Indonesia-based hospital group Mitra Keluarga.
Openspace’s tech experts Dr Yiliang Zhao (left) and Wenbo Zong.

 

For more information: www.openspace.vc

 

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